What are double tax agreements?

If both countries or territories tax their residents on worldwide income you could be taxed twice on the same income. Double tax agreements (DTAs) have been negotiated between New Zealand and many other countries or territories to decide which country or territory has the first or sole right to tax specific types of income. Find out from this table if your country or territory has a DTA with New Zealand.

Note

If New Zealand has a DTA with your country or territory, that DTA will be available in your country or territory. This may be useful if you want the information in a language other than English.

Many countries or territories that don't have a DTA with New Zealand still allow their citizens to claim a credit for tax paid overseas.

You may be a tax resident in both New Zealand and another country or territory. This means that you are a resident in two countries or territories and subject to the tax laws of each.

Double tax agreement between Australia and New Zealand

For example, if you are a resident in both Australia and New Zealand, the DTA between these two countries states that you will be a resident of the country where a permanent home is available to you. See the table below to find your circumstances.

If ...

then you will be a resident of the country ...

you have a permanent home in both countries

where your personal and economic relations are closer.

you do not have a permanent home in either country

where your personal and economic relations are closer.

you cannot determine where your personal and economic relations are closer

where you have an habitual abode.

you have an habitual abode in both countries

that you are a national of.

you don't have an habitual abode in either country

that you are a national of.

the person is not an individual

in which the place of effective management is situated.

the person is not an individual and the place of effective management is neither or it cannot be determined

competent authorities to determine by mutual agreement.

How double tax agreements affect your overseas pension

This table shows which countries or territories have an agreement with New Zealand that impacts on the taxation of foreign pensions.

Note

Tax relief under double tax agreements

Tax relief from New Zealand tax may be sought by non-resident contractors and employees under DTAs.

My country or territory has a DTA with New Zealand

If your country or territory has a DTA with New Zealand, you may be exempt from New Zealand income tax.

If you are ...

then ...

an employee of a non-resident employer

some DTAs may exempt you from income tax in New Zealand if:

you are in New Zealand for 183 days or less in any 12-month period or income year, and

if your employer is a non-resident and the remuneration is not deductible in determining profits in relation to a permanent establishment in New Zealand.

an independent (self-employed) contractor

most DTAs may exempt you from income tax in New Zealand if you are in New Zealand for less than 183 days and you do not have a fixed base or permanent establishment in New Zealand.

a company or other entity

Some DTAs will exempt you if you do not have a fixed base or permanent establishment in New Zealand.

Note

The conditions vary between DTAs for both individuals and companies. Some types of income may not be exempt, for example, royalties. You should check your country's or territory's DTA for more information.

My country or territory doesn't have a DTA with New Zealand

If your country or territory doesn't have a DTA with New Zealand and you are ...

then ...

a tax resident in that country or territory

you will be liable for income tax.

receiving payments for contract work undertaken in New Zealand

the payer must deduct schedular tax (see next table).

If your country or territory doesn't have a DTA with New Zealand and you are ...

and ...

then the payer must deduct schedular tax of ...

an independent non-resident contractor, or

a non-resident contractor company

have supplied the payer with a completed Tax rate notification for contractors (IR330C)

the rate you have chosen, or 15% if you haven't chosen a rate

an independent non-resident contractor

have not supplied the payer with a completed IR330C

45%

a non-resident contractor company

have not supplied the payer with a completed IR330C

20%.

Note

This tax is an interim tax and you must file tax returns in New Zealand to work out your actual amount of tax due.

In some cases, the tax that has been deducted is more than your actual amount of tax due. For example, if you can claim expenses against the contract income. In this case, you can apply for a special tax rate to suit your particular situation.

Claiming a foreign tax credit if the foreign tax paid is covered by a DTA

To relieve double taxation, a New Zealand tax resident taxpayer may be entitled to claim a foreign tax credit against their New Zealand income tax liability for any foreign income tax paid. There are two circumstances where a taxpayer may be entitled to claim a foreign tax credit. If the foreign tax:

is covered by a DTA, a credit may be allowed under the terms of that DTA

is not covered by a DTA, a foreign tax credit may be allowed directly.

Non-resident contractors

When considering whether a DTA provides a non-resident contractor with relief from New Zealand tax, the most common issues to consider are:

whether the non-resident contractor is an enterprise, and if so, if it has a permanent establishment in New Zealand at the time the contract activity is performed

if the non-resident contractor is an individual, what relief is provided by either the "Dependent services", "Independent services" or "Business profits" articles of the DTA, whichever applies to the contractor

whether the income is deemed to be a royalty within the meaning contained in the DTA.

Many DTAs contain articles dealing with particular areas or industries that may or may not provide a non-resident contractor with relief from New Zealand tax. It is therefore important not to assume that because one DTA provides relief to a resident of one country or territory, the same relief will be provided to a non-resident contractor who is the resident of another country or territory.

Non-resident employees

A non-resident employee may seek relief from New Zealand tax if a (DTA exists between New Zealand and the country or territory in which the employee is a tax resident). Relief may be available under the "Dependent services" article contained within the DTA. Usually, there are three common requirements, all of which an employee must meet to obtain relief under the treaty. They are:

the employee's presence in New Zealand must not exceed, in aggregate, 183 days in any 12-month period

the remuneration is to be paid by, or on behalf of, an employer who is not a resident of New Zealand

the remuneration is not to be borne by a "permanent establishment" or fixed base of the employer in New Zealand

Note

Some DTAs refer to an "income year", "financial year" or "fiscal year" instead of a 12-month period. These references are to New Zealand's deemed income year of 1 April to the following 31 March.

Also if you’re in New Zealand for only part of a day, it is counted as being a whole day. This means that the days on which you depart or arrive are treated as “days present" in New Zealand.

Find out more

The Non-resident Contractors Team can help you with information about DTAs. You can either: